SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant |X|
Filed by a party other than the registrant |_|
Check the appropriate box: |_| Confidential, for Use of the
|X| Preliminary proxy statement Commission Only (as permitted
|_| Definitive proxy statement by Rule 14a-6(e)(2))
|_| Definitive additional materials
|_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
Communications Systems, Inc.
-------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
Communications Systems, Inc.
-------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Items 22(a)(2) of Schedule A.
|_| $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transactions applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange
Act Rule 0-11. (Set forth the amount on which the filing fee is
calculated and state how it was determined.)
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
| | Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing party:
(4) Date filed:
<PAGE>
COMMUNICATIONS SYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
May 15, 1995
Notice is hereby given that the Annual Meeting of Shareholders of
Communications Systems, Inc. will be held at The Marquette Hotel, 7th and
Marquette, Minneapolis, Minnesota 55402, on Monday, May 15, 1995 at 3:00 p.m.,
Central Daylight Time, for the following purposes:
1. To elect two (2) directors to hold office until the 1998
Annual Meeting of Shareholders or
until their successors are elected.
2. To consider and act upon a proposal to amend the Company's
Articles of Incorporation to increase the total number of
authorized shares of common stock, par value $.05 per share,
by 15,000,000 shares to a total of 30,000,000 shares.
3. To ratify and approve an amendment to the Company's 1992 Stock
Plan to increase the total number of shares of common stock
available for issuance under such plan by 500,000 shares to
900,000 shares.
4. To ratify and approve an amendment to the Company's Employee
Stock Purchase Plan to increase the total number of shares of
common stock available for issuance under such plan by 100,000
shares to 200,000 shares.
5. To transact such other business as may properly come before
the meeting or any adjournment or adjournments thereof.
The Board of Directors has fixed the close of business on March 24,
1995 as the record date for determination of shareholders entitled to notice of
and to vote at the meeting.
By Order of the Board of Directors
Richard A. Primuth,
Secretary
Hector, Minnesota
April 11, 1995
TO ASSURE YOUR REPRESENTATION AT THE MEETING, PLEASE SIGN, DATE AND
RETURN YOUR PROXY IN THE ENCLOSED ENVELOPE, WHETHER OR NOT YOU EXPECT TO ATTEND
IN PERSON. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE THEIR PROXIES AND VOTE
IN PERSON IF THEY SO DESIRE.
<PAGE>
COMMUNICATIONS SYSTEMS, INC.
213 South Main Street
Hector, Minnesota 55342
(612) 848-6231
PROXY STATEMENT
This Proxy Statement is furnished to the shareholders of Communications
Systems, Inc. ("CSI" or the "Company") in connection with the solicitation of
proxies by the Board of Directors of the Company to be voted at the Annual
Meeting of Shareholders to be held at The Marquette Hotel, 7th and Marquette,
Minneapolis, Minnesota 55402 on Monday, May 15, 1995, beginning at 3:00 p.m. or
at any adjournment or adjournments thereof. The cost of this solicitation will
be paid by the Company. In addition to solicitation by mail, officers, directors
and employees of the Company may solicit proxies by telephone, telegraph or in
person. The Company may also request banks and brokers to solicit their
customers who have a beneficial interest in the Company's Common Stock
registered in the names of nominees and will reimburse such banks and brokers
for their reasonable out-of-pocket expenses.
Any proxy may be revoked at any time before it is voted by receipt of a
proxy properly signed and dated subsequent to an earlier proxy, or by revocation
of a written proxy by request in person at the Annual Meeting. If not so
revoked, the shares represented by such proxy will be voted by the persons
designated as proxies in favor of the matters indicated. In the event any other
matters which properly come before the meeting require a vote of shareholders,
the persons named as proxies will vote in accordance with their judgment on such
matters. The Company's corporate offices are located at 213 South Main Street,
Hector, Minnesota 55342, and its telephone number is (612) 848-6231. The mailing
of this Proxy Statement to shareholders of the Company commenced on or about
April 11, 1995.
The total number of shares outstanding and entitled to vote at the
meeting as of March 24, 1995 consisted of 9,024,165 shares of $.05 par value
Common Stock. Only shareholders of record at the close of business on March 24,
1995 will be entitled to vote at the meeting. Each share of Common Stock is
entitled to one vote. Cumulative voting in the election of directors is not
permitted. The presence in person or by proxy of the holders of a majority of
the shares entitled to vote at the Annual Meeting of Shareholders constitutes a
quorum for the transaction of business.
Under Minnesota law, each item of business properly presented at a
meeting of shareholders generally must be approved by the affirmative vote of
the holders of a majority of the voting power of the shares present, in person
or by proxy, and entitled to vote on that item of business. However, if the
shares present and entitled to vote on any particular item of business would not
constitute a quorum for the transaction of business at the meeting, then that
item must be approved by holders of a majority of the minimum number of shares
that would constitute such a quorum. Votes cast by proxy or in person at the
Annual Meeting of Shareholders will be tabulated at the meeting to determine
whether or not a quorum is present. Abstentions on a particular item of business
will be treated as shares that are present and entitled to vote for purposes of
determining the presence of a quorum, but as unvoted for purposes of determining
approval of the matter. If a broker indicates on the proxy that it does not have
discretionary authority as to certain shares to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to that matter.
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth the number of shares of the Company's
Common Stock owned by each person known by the Company to own of record or
beneficially five percent (5%) or more of the Company's Common Stock and all
officers and directors of the Company as a group using information available as
of March 15, 1995.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner Beneficial Ownership of Class
<S> <C> <C>
Curtis A. Sampson ............................ 1,726,437(1) 19.1%
213 South Main Street
Hector, MN 55342
George D. Bjurman ............................ 564,100 6.3%
& Associates
George Andrew Bjurman
Owen Thomas Barry III
10100 Santa Monica Blvd.
Suite 1200
Los Angeles, CA 90067
John C. Ortman ............................... 537,350(2) 6.0%
1506 17th Street
Lawrenceville, IL 62439
Paul N. Hanson ............................... 495,989(3) 5.5%
213 South Main Street
Hector, MN 55342
All directors and executive officers
as a group (12 persons) ...................... 3,111,796(4) 34.5%
</TABLE>
(1) Includes 28,898 shares owned by Mr. Sampson's spouse, as to which
beneficial ownership is disclaimed, 52,000 shares which may be
purchased within sixty days from the date hereof pursuant to
outstanding stock options, and 396,798 shares owned by the
Communications Systems, Inc. Employee Stock Ownership Plan ("CSI ESOP")
of which Mr. Sampson is a Trustee and 24,213 shares of Company common
stock owned by the Hector Communications Corporation Employee Stock
Ownership Plan ("Hector ESOP") of which Mr. Sampson is a Trustee. Mr.
Sampson disclaims any beneficial ownership of shares owned by the CSI
ESOP and the Hector ESOP in excess of the 18,639 shares allocated to
his account as of December 31, 1994.
(2) Includes 8,000 shares which may be purchased within sixty days from the
date hereof pursuant to outstanding stock options.
(3) The shares listed above include 34,978 shares owned by Mr. Hanson
directly, 40,000 shares which may be purchased within 60 days from the
date hereof pursuant to outstanding stock options and 396,798 shares
owned by the CSI ESOP and 24,213 shares of Company common stock owned
2
<PAGE>
by the Hector ESOP. Mr. Hanson is a Trustee of the CSI ESOP and the
Hector ESOP. Mr. Hanson disclaims any beneficial ownership of shares
owned by the CSI ESOP and the Hector ESOP in excess of the 7,828 shares
allocated to his account as of December 31, 1994.
(4) Includes 2,379,978 shares owned by officers and directors as a group
directly, 77,099 shares held by their respective spouses, 252,000
shares which may be purchased by directors and officers within 60 days
from the date hereof pursuant to outstanding stock options,
396,798 shares owned by the CSI ESOP and 24,213 shares of Company
common stock owned by the Hector ESOP. Messrs. Curtis A. Sampson,
Wayne E. Sampson and Paul N. Hanson serve as Trustees of the CSI ESOP
and Mr. Curtis A. Sampson and Mr. Paul N. Hanson serve as Trustees of
the Hector ESOP; except for shares allocated to the respective
accounts of Mr. Curtis Sampson and Mr. Paul N. Hanson, Messrs.
Sampson, Sampson and Hanson disclaim beneficial ownership of the
shares held by such ESOPs.
1. ELECTION OF DIRECTORS
The Board of Directors has nominated and recommends for election as
directors of the Company the two persons named below. Mr. C. A. Sampson has
served as a director since 1969; Mr. Parris has been nominated to fill a vacancy
because Mr. James O. Ericson, currently a director, determined not to stand for
re-election. It is intended that proxies will be voted for such nominees. The
Board of Directors believes that each nominee named below will be able to serve,
but should a nominee be unable to serve as a director, the persons named in the
proxies have advised that they will vote for the election of such substitute
nominee as the Board of Directors may propose.
Information regarding the nominees and other directors filling
unexpired terms is set forth on the following page, including information
regarding their principal occupations currently and for the preceding five
years. Ownership of Common Stock of the Company is given as of March 15, 1995.
To the best of the Company's knowledge, unless otherwise indicated below, the
persons indicated possess sole voting and investment power with respect to their
stock ownership.
<TABLE>
<CAPTION>
Year Amount of Percent of
Current Common Outstanding
Principal Occupation Director Term Stock Common
Name and Age and other Directorships Since Expires Ownership Stock
Stock
Nominees proposed for Election for Term Expiring in 1998
<S> <C> <C> <C> <C> <C>
Curtis A. Sampson Chairman of the Board, President and 1969 1995 1,726,437(1) 19.1%
(61)* Chief Executive Officer of the
Company; Chairman of the Board of Hector
Communications Corporation (independent
telephone companies).
Joseph W. Parris Attorney, Mediator, Arbitrator -- -- 113,000 1.3%
(75) and Private Investor.
3
<PAGE>
Year Amount of Percent of
Current Common Outstanding
Principal Occupation Director Term Stock Common
Name and Age and other Directorships Since Expires Ownership Stock
Directors Serving Unexpired Terms
Edwin C. Freeman Vice President and General Manager, 1988 1996 18,100(2) .2%
(39) Bro-Tex, Inc. (paper and cloth wiper
products, and fiber product recycler)
since March, 1992; Project Manager,
Corporate Development, National
Computer Systems, Inc. from 1989 to
1992.
Edward E. Strickland Business and management 1981 1996 28,000(3) .3%
(68) consultant; Director of: Green Isle
Environmental Services, Inc.
(manufacturing); Bio-Vascular, Inc.
(medical devices); Intercim, Inc.
(factory management software);
Hector Communications Corporation
(independent telephone companies);
and, Avecor Cardiovascular,Inc.
(medical devices).
John C. Ortman Private Investor. Vice President-Sales 1990 1996 535,350(3) 6.0%
(73) of Suttle Apparatus Corporation (CSI's
telephone station apparatus subsidiary)
from 1968 to 1986.
C.A. Anderson, M.D. President and CEO of Crow River 1988 1997 193,904(4) 2.1%
(74) Properties of Hutchinson, Inc. (real
estate development). Chairman of the
Board, Trans Com Net, Inc. (trucking
phone enhancement).
Paul J. Anderson Private Investor. 1975 1997 194,618(5) 2.2%
(63)
Wayne E. Sampson Management consultant; director of 1981 1997 443,511(6) 4.9%
(65)* Hector Communications Corporation
</TABLE>
* Wayne E. Sampson and Curtis A. Sampson are brothers.
(1) See footnote 1 under "Security Ownership of Certain Beneficial Owners
and Management."
4
<PAGE>
(2) Includes 2,100 shares owned by Mr. Freeman's spouse, as to which
beneficial ownership is disclaimed and 8,000 shares which may be
purchased pursuant to outstanding and presently exercisable stock
options.
(3) Includes 8,000 shares which may be purchased pursuant to outstanding
and presently exercisable stock options.
(4) Includes 5,000 shares owned by Dr. Anderson's wife, as to which
beneficial ownership is disclaimed and 8,000 shares which may be
purchased pursuant to outstanding and presently exercisable stock
options.
(5) Includes 30,309 shares owned by Mr. Anderson's wife, as to which
beneficial ownership is disclaimed, and 8,000 shares which may be
purchased pursuant to outstanding and presently exercisable stock
options.
(6) Includes 14,000 shares owned by Mr. Sampson directly, 500 shares owned
by his spouse, as to which beneficial ownership is disclaimed, 443,011
shares owned by the CSI ESOP of which Mr. Sampson is a Trustee and
8,000 shares which may be purchased pursuant to outstanding and
presently exercisable stock options. Mr. Sampson disclaims any
beneficial ownership of the shares owned by the CSI ESOP.
Information Regarding Board and Board Committees
The Board of Directors met four times during 1994. Each director
nominee and continuing director attended at least 75% of the 1994 meetings of
the Board and each committee on which such director served.
Directors who are not otherwise directly or indirectly compensated by the
Company (currently Messrs. C. A. Anderson, P. J. Anderson, E. C. Freeman, J. C.
Ortman, W. E. Sampson and E. E. Strickland) receive a monthly retainer of $400
plus $400 for each Board, Audit Committee or Compensation Committee meeting
attended. Messrs. Strickland and W. E. Sampson, in consideration for their
additional services as members of the Executive Committee, are paid an
additional monthly retainer of $350. Mr. C. A. Sampson received no additional
cash compensation for service on the Board.
Each non-employee member of the Board of Directors receives at the time
of the annual meeting of the shareholders an option to purchase 2,000 shares of
the Company's Common Stock. Each director's option is at a price equal to the
fair market value of the Company's Common Stock on the date of grant exercisable
over a ten-year period beginning six months after the date the option is
granted.
The Company has an Audit Committee consisting of Messrs. Paul J. Anderson,
W. E. Sampson and E. E. Strickland which met twice during the last fiscal year.
The Audit Committee recommends to the full Board of Directors the selection of
independent accountants and reviews the activities and reports of the
independent accountants, as well as the internal accounting controls of the
Company.
The Company has a Compensation Committee consisting of Messrs. C. A.
Sampson, Edwin C. Freeman and W. E. Sampson. The Compensation Committee met
twice during the last fiscal year.
5
<PAGE>
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following tables show, for the fiscal years ending December 31,
1994, 1993 and 1992, the cash and other compensation paid to or accrued by the
Company for each executive officer whose total cash compensation exceeded
$100,000 during fiscal 1994 in all capacities served, as well as information
relating to option grants, option exercises and fiscal year end option values
applicable to such persons.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
Securities All
Underlying Other
Name and Principal Position Year Salary Bonus Options Compensation
<S> <C> <C> <C> <C> <C>
Curtis A. Sampson, Chief Executive 1994 $147,360 $25,000 8,000
Officer of the Company (1) 1993 $142,948 -0- 10,600
1992 $116,250 $40,000 13,400
John C. Hudson, Managing Director 1994 $ 85,475 $99,530 6,000 $57,035
Austin Taylor Communications (2) 1993 $ 75,000 $36,372 10,000 $40,500
1992 $ 80,392 $65,449 -0- $37,484
Jeffrey K. Berg, President 1994 $ 91,934 $20,000 12,000
Suttle Apparatus Corporation 1993 $ 86,018 $12,500 10,000
1992 $ 75,095 $15,000 8,000
</TABLE>
Note: Certain columns have not been included in this table because the
information called for therein is not applicable to the Company or the
individual named above for the periods indicated.
(1) Mr. Sampson devotes approximately 60% of his working time to the
Company. The balance of his working time Mr. Sampson serves as Chairman
and Executive Officer of Hector Communications Corporation, for which
he is separately compensated.
(2) Mr. Hudson became an employee of the Company February 1, 1992. For each
of the three years, more than 75% of the amounts listed under "All
Other Compensation" represents the Company's contribution to Mr.
Hudson's pension plan.
6
<PAGE>
<TABLE>
<CAPTION>
OPTION GRANTS IN 1994
Individual Grants
% of Total Potential Realizable
Number Options Value at Assumed
of Granted Annual
Securities to Rates of Stock
Underlying Employees Exercise Price Appreciation
Options in Price Expiration for Option Term
Name Granted 1994 Per Share Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Curtis A. Sampson 8,000 5.9% $13.20 3/8/99 $16,923 $49,009
John C. Hudson 6,000 4.3% 12.00 3/8/99 19,892 43,957
Jeffrey K. Berg 12,000 8.9% 12.00 3/8/99 39,785 87,913
</TABLE>
<TABLE>
AGGREGATED OPTION EXERCISES IN 1994
AND YEAR-END OPTION VALUES
Value of Unexercised
in-the-Money Options
Value Realized at FY-End
(Market Price Number of Unexercised (Based on FY-End
Shares Acquired at exercise less Options at FY-End Price of $12.50/sh)
Name on Exercise exercise price) Exercisable Unexercisable Exercisable Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Curtis A. Sampson -- -- 48,000 4,000 $284,749 --
John C. Hudson -- -- 13,000 3,000 $42,125 $1,500
Jeffrey K. Berg -- -- 28,000 8,000 $145,250 $4,000
</TABLE>
Compensation Committee Interlocks and Insider Participation
During fiscal 1994, Curtis A. Sampson and Wayne E. Sampson served as
members of the Company's Compensation Committee. Mr. C. A. Sampson is the
President and Chief Executive Officer of the Company and Mr. W. E. Sampson, a
director, is his brother.
COMPENSATION COMMITTEE REPORT
The Compensation Committee appointed by the Company's Board of
Directors has primary responsibility in regard to determinations relating to
executive compensation and administration of the Company's stock option plans.
All decisions by the Compensation Committee pertaining to the compensation of
the Company's executive officers are reviewed and approved by the full Board.
Mr. Curtis A. Sampson, the Company's Chairman and Chief Executive Officer, did
not participate in any discussions or decisions of either the Compensation
Committee or the Board of Directors relating to any aspect of his compensation.
7
<PAGE>
Compensation Policies
It is the objective of the Compensation Committee to pay compensation
at levels which will attract, retain and motivate executives with superior
leadership and management abilities and to structure the forms of compensation
paid such that their interests will be closely aligned with achievement of
superior financial performance by the Company. With these objectives in mind,
the compensation currently paid to the Company's executive officers principally
consists of three elements: base salary, bonus and periodic stock option awards.
Compensation Elements
Base salaries of the Company's executive officers are generally
established by reference to base salaries paid to executives in similar
positions with similar responsibilities based upon publicly available
compensation surveys and limited informal surveys by Compensation Committee
members. Base salaries are reviewed annually. Adjustments to base salaries are
determined by reference to individual and company performance having in mind
both measurable financial factors, as well as subjective judgments by the
Compensation Committee in regard to factors such as development and execution of
strategic plans, changes in areas of responsibility and the development and
management of employees. The Compensation Committee does not, however, assign
specific weights to these various factors in reaching its decisions.
Bonuses are intended to provide executives with an opportunity to
receive additional cash compensation, but only if they earn it through Company
and individual performance. After year end results are available, the Committee
determines each officer's bonus based on the Company's performance, as measured
by such factors as growth in earnings per share, as well as the Compensation
Committee's subjective assessment of individual performance in the executive's
area of responsibility, but without assigning specific weight to the various
factors considered.
Stock options are awarded to the Company's executives under the
Company's 1992 Stock Plan. Stock options represent an additional vehicle for
aligning management's and stockholders' interests, specifically motivating
executives to remain focused on factors which will enhance the market value of
the Company's common stock. If there is no price appreciation in the common
stock, the option holders receive no benefit from the stock options, because
options are granted with an option exercise price at least equal to the fair
market value of the common stock on the date of grant.
The Compensation Committee did not utilize the foregoing methodology in
establishing Mr. Hudson's compensation. Rather, his compensation for 1992, 1993
and 1994 was established by a written contract negotiated at arm's length in
connection with the February 1, 1992 acquisition of Austin Taylor Communications
Ltd.
8
<PAGE>
Chief Executive Officer Compensation
Mr. Curtis A. Sampson participates in the same executive compensation
plans provided to other senior executives and is evaluated by the same factors
applicable to the other executives as described above. Mr. Sampson's total cash
compensation for 1994 increased approximately 20% from the prior year. While the
Company's earnings in 1994 were essentially the same as 1993, the two other
members of the Compensation Committee believe that Mr. C. A. Sampson's increase
in compensation is reasonable in relation to the Company's performance during
the past two years. During the past two years Mr. Sampson's aggregate salary and
bonus has increased approximately 16%, while the Company's net income increased
about 24%, before giving effect to a one time benefit resulting from a change in
accounting principles in 1992. Also, the number of shares subject to options
awarded to Mr. Sampson have declined in each of the last two years from options
awarded in 1992. Further, because of his significant holdings of Company common
stock, under applicable IRS rules, Mr. Sampson's options are priced at 110% of
the market price on the date of grant. The two other members of the Compensation
Committee believe, based upon their general knowledge of compensation paid to
other chief executives and published regional salary data (but without
conducting a formal survey), that Mr. Sampson's total compensation is below that
which could be reasonably justified in relation to the scope of his
responsibilities, as well as the financial performance of the Company and total
shareholder return during the past several years.
Submitted by the Compensation Committee of the Board of Directors
Edwin C. Freeman Curtis A. Sampson Wayne E. Sampson
PERFORMANCE GRAPH
The following table presents, at the end of each of the Company's last
five fiscal years, the cumulative total return on the common stock of the
Company as compared to the cumulative total return of the NASDAQ Stock Market
Total Return Index (U.S. Companies), NASDAQ Telecommunications Stock Total
Return Index, and the NASDAQ Electronics Total Return Index assuming, in each
case, the investment of $100 on December 31, 1989 and the reinvestment of all
dividends.
<TABLE>
<CAPTION>
Comparison Of Five-Year Cumulative Total Return
Total Return at December 31,
<S> <C> <C> <C> <C> <C> <C>
Company or Index ........................... 1989 1990 1991 1992 1993 1994
Communications Systems, Inc. ............... 100 117 263 291 510 491
NASDAQ Stock Market ........................ 100 85 136 157 181 175
NASDAQ Electronics Component Stocks ........ 100 97 138 216 296 328
NASDAQ Telecommunications Stock ............ 100 67 93 114 176 146
</TABLE>
2. PROPOSAL TO AMEND THE COMPANY'S
ARTICLES OF INCORPORATION
The Board of Directors has approved an amendment to Article V of the
Company's Restated Articles of Incorporation which would increase the number of
authorized shares of common stock from 15,000,000 shares to 30,000,000 shares.
The Board believes adoption of this amendment is in the best interests of the
shareholders and recommends that shareholders vote in favor of this proposal. At
9
<PAGE>
March 15, 1995, 9,024,165 shares of common stock were issued and outstanding. In
addition, approximately 980,000 shares are reserved for future issuance under
the Company's 1992 Stock Plan, the Company's Employee Stock Purchase Plan, and
the Company's shelf registration relating to the issuance of shares in
connection with future acquisitions leaving approximately 5,000,000 shares
available for corporate purposes. If the shareholders approve the amendments to
the Company's Stock Plan and Stock Purchase Plan to increase the number of
shares available under such plan, as recommended by the Board of Directors in
Proposals 3 and 4 of this Proxy Statement, an additional 600,000 shares will be
reserved for future issuance under those plans.
The Company has no present plans, understandings or agreements for the
issuance or use of the proposed additional shares of common stock. However, the
Board of Directors believes the Company needs additional authorized shares to
provide the Company with the flexibility, as the need arises, to use common
stock, or securities convertible into common stock, without the expense and
delay of a special shareholder's meeting, in the event of any future public
offerings, private placements, significant acquisitions, stock dividends, and
for other purposes. Such activities could require more shares of common stock
than are available to the Company.
The newly authorized common stock would be identical to the existing
authorized common stock in all respects. Holders of common stock are entitled to
one vote per share. Cumulative voting in an election of directors is not
permitted. Holders of common stock have no conversion rights and or preemptive
or other rights to subscribe for additional securities. Upon liquidation of the
Company, the holders of common stock will be entitled to share ratably in all
assets available for distribution after the payment or provision for payment of
all debts and liabilities and subject to the rights of the holders of preferred
stock, if any, which may be outstanding. Each share of common stock is entitled
to such dividends as may from time to time be declared by the Board of Directors
out of funds legally available therefor.
In addition to the common stock, the Company's Articles of
Incorporation currently authorize the issuance of 3,000,000 shares of preferred
stock, par value $1.00 per share, none of which are currently outstanding.
Although the Board of Directors has no present plan to do so, authorized and
unissued common stock and preferred stock could be issued in one or more
transactions with terms, provisions and rights which would make it more
difficult, and less likely, to take over the Company. Any such issuance of
additional shares could have the effect of diluting the earnings per share and
book value per share of existing shares of common stock, and such additional
shares could be used to dilute the share ownership of persons seeking to obtain
control of the Company.
The resolution to be considered and acted upon by the shareholders at
the annual meeting is as follows:
RESOLVED, that the first sentence of Article V of the Restated Articles
of Incorporation of the Company be amended to read as follows:
ARTICLE V
"The authorized capital stock of this corporation shall be
Thirty Million (30,000,000) shares of Common Stock of the par
value of five cents ($.05) per share (the "Common Stock") and
Three Million (3,000,000) shares of Preferred Stock of the par
value of One Dollar ($1.00) per share (the "Preferred Stock").
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF AN
AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION.
3. PROPOSAL TO AMEND THE 1992 STOCK PLAN
General Information
10
<PAGE>
On March 30, 1992, the Company's Board of Directors adopted the
Communications Systems, Inc. 1992 Stock Plan (the "1992 Plan") and such action
was approved by the shareholders on May 15, 1992. The purpose of the 1992 Plan
is to enable the Company and its subsidiaries to retain and attract key
employees and non-employee directors who contribute to the Company's success by
their ability, ingenuity and industry and to enable such key employees and
non-employee directors to participate in the long-term success and growth of the
Company by giving them a proprietary interest in the Company. The 1992 Plan
authorizes the granting of stock options, the issuance of restricted stock and
the grant of stock appreciation rights
Proposed Plan Amendment
The 1992 Plan originally authorized the issuance of 400,000 shares of
Common Stock (as adjusted for a stock split in 1993) pursuant to options and
restricted stock grants. On March 2, 1995, the Board of Directors amended the
Plan, subject to ratification and approval of the shareholders, to increase the
total number of shares available under the 1992 Plan by 500,000 shares to a
total of 900,000 shares. At March 15, 1995, a total of approximately 300,000
shares (as adjusted for a stock split in 1993) have been issued or are subject
to issuance upon exercise of outstanding options under the 1992 Plan. Therefore,
without shareholder approval of this amendment to the 1992 Plan, only about
100,000 shares remain available under the 1992 Plan for awards. The Board of
Directors deems it prudent to increase the shares available for grant under the
1992 Plan by 500,000 shares to facilitate future option grants and restricted
stock awards.
Summary of the 1992 Plan
Shares Available Under 1992 Plan. The maximum number of shares of
common stock presently reserved and available for awards under the 1992 Plan, is
97,098 (subject to possible adjustment in the event of stock splits or other
similar changes in the common stock). Shares of common stock covered by expired
or terminated stock options and forfeited shares of restricted stock or deferred
stock may be used for subsequent awards under the 1992 Plan.
Eligibility and Administration. Officers and other key employees of the
Company and its subsidiaries who are responsible for or contribute to the
management, growth and/or profitability of the business of the Company and its
subsidiaries are eligible to be granted awards under the 1992 Plan. The 1992
Plan is administered by the Board or, in its discretion, by a committee of not
less than three "disinterested persons," as defined in the 1992 Plan (the
"Committee"), who are appointed by the Board of Directors. The term "Board" as
used in this section refers to the Board or, if the Board has delegated its
authority, the Committee. The Board has the power to make awards, determine the
number of shares covered by each award and other terms and conditions of such
awards, interpret the 1992 Plan, and adopt rules, regulations and procedures
with respect to the administration of the 1992 Plan. The Board may delegate its
authority to officers of the Company for the purpose of selecting key employees
who are not officers of the Company to be participants in the 1992 Plan.
Awards Under the 1992 Plan
Stock Options. The Board may grant stock options that either qualify as
"incentive stock options" under the Internal Revenue Code or are "non-qualified
stock options" in such form and upon such terms as the Board may approve from
time to time. Stock options granted under the 1992 Plan may be exercised during
their respective terms as determined by the Board. The purchase price may be
paid by tendering cash or, in the Board's discretion, by tendering promissory
notes or common stock. The Committee may, in its sole discretion, permit
optionees to pay the option exercise price by having the Company withhold upon
exercise of the option a number of shares with a fair market value equal to the
aggregate option exercise price. No stock option shall be transferable by the
optionee or exercised by anyone else during the optionee's lifetime.
Stock options may be exercised during varying periods of time after a
participant's termination of employment, depending upon the reason for the
termination. Following a participant's death, the participant's stock options
may be exercised by the legal representative of the estate or the optionee's
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legatee for a period of three years or until the expiration of the stated term
of the option, whichever is less. The same time periods apply if the participant
is terminated by reason of disability or retirement. If the participant is
terminated without cause, the option may be exercised for the lesser of three
months or the balance of the option's term. If the participant's employment is
terminated for any other reason, the participant's stock options immediately
terminate. These exercise periods may be reduced by the Board for particular
options.
No incentive stock options shall be granted under the 1992 Plan after
March 30, 2002. The term of an incentive stock option may not exceed 10 years
(or 5 years if issued to a participant who owns or is deemed to own more than
10% of the combined voting power of all classes of voting stock of the Company,
any subsidiary or affiliate). The aggregate fair market value of the common
stock with respect to which an incentive stock option is exercisable for the
first time by an optionee during any calendar year shall not exceed $100,000.
The exercise price under an incentive stock option may not be less than the fair
market value of the common stock on the date the option is granted (or, in the
event the participant owns more than 10% of the combined voting power of all
classes of stock of the Company, the option price shall be not less than 110% of
the fair market value of the stock on the date the option is granted). The
exercise price for non-qualified options granted under the 1992 Plan may be less
than 100% of the fair market value of the common stock on the date of grant.
Restricted Stock. The Board may grant restricted stock awards that
result in shares of common stock being issued to a participant subject to
restrictions against disposition during a restricted period established by the
Board. The Board may condition the grant of restricted stock upon the attainment
of specified performance goals or service requirements. The provisions of
restricted stock awards need not be the same with respect to each recipient. The
restricted stock will be held in custody by the Company until the restrictions
thereon have lapsed. During the period of the restrictions, a participant has
the right to vote the shares of restricted stock and to receive dividends and
distributions unless the Board requires such dividends and distributions to be
held by the Company subject to the same restrictions as the restricted stock.
Notwithstanding the foregoing, all restrictions with respect to restricted stock
lapse 60 days (or less as determined by the Board) prior to the occurrence of a
merger or other significant corporate change, as provided in the 1992 Plan.
If a participant terminates employment during the period of the
restrictions, all shares still subject to restrictions will be forfeited and
returned to the Company, subject to the right of the Board to waive such
restrictions in the event of a participant's death, total disability, retirement
or under special circumstances approved by the Board.
General Provisions. The Board may, at the time of any grant under the
1992 Plan, provide that the shares received under the 1992 Plan shall be subject
to repurchase by the Company in the event of termination of employment of the
participant. The repurchase price will be the fair market value of the stock or,
in the case of a termination for cause (as defined in the 1992 Plan), the amount
of consideration paid for the stock. The Board may also, at the time of grant,
provide the Company with similar repurchase rights, upon terms and conditions
specified by the Board, with respect to any participant who, at any time within
two years after termination of employment with the Company, directly or
indirectly competes with, or is employed by a competitor of, the Company.
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Federal Income Tax Consequences
Stock Options. An optionee will not realize taxable compensation income
upon the grant of an incentive stock option. In addition, an optionee generally
will not realize taxable compensation income upon the exercise of an incentive
stock option if he or she exercises it as an employee or within three months
after termination of employment (or within one year after termination if the
termination results from a permanent and total disability). The amount by which
the fair market value of the shares purchased exceeds the aggregate option price
at the time of exercise shall be treated as alternative minimum taxable income
for purposes of the alterative minimum tax. If stock acquired pursuant to an
incentive stock option is not disposed of prior to the date two years from the
option grant date or prior to one year from the option exercise date, any gain
or loss realized upon the sale of such shares will be characterized as capital
gain or loss. If the applicable holding periods are not satisfied, then any gain
realized in connection with the disposition of such stock will generally be
taxable as compensation income in the year in which the disposition occurred, to
the extent of the difference between the fair market value of such stock on the
date of exercise and the option exercise price. The Company is entitled to a tax
deduction to the extent, and at the time, that the participant realized
compensation income. The balance of any gain will be characterized as a capital
gain. Under current law, net long-term capital gains are taxed at a maximum
federal tax rate of 28%, while other income may be taxed at a higher federal
rate.
An optionee will not realize taxable compensation income upon the grant
of a non-qualified stock option. When an optionee exercises a non-qualified
stock option, he or she will realize taxable compensation income at that time
equal to the difference between the aggregate option price and the fair market
value of the stock on the date of exercise.
Upon the exercise of a non-qualified stock option, the 1992 Plan
requires the optionee to pay to the Company any amount necessary to satisfy
applicable federal, state or local withholding tax requirements. Under the 1992
Plan, the Board may grant options that permit the optionee to elect to satisfy
withholding tax requirements associated with the exercise of an option by
authorizing the Company to retain from the number of shares that would otherwise
be deliverable to the optionee that number of shares having an aggregate fair
market value equal to the tax required to be withheld. The Company would pay the
tax liability from its own funds.
Restricted Stock. The grant of restricted stock should not result in
immediate income for the participant or in a deduction for the Company for
federal income tax purposes, assuming the shares are nontransferable and subject
to restrictions which would result in a "substantial risk of forfeiture" as
intended by the Company. If the shares are transferable or there are no such
restrictions, the participant would recognize compensation income upon receipt
of the award. Otherwise, a participant will generally realize taxable
compensation income when any such restrictions lapse. The amount of such income
will be the value of the common stock on that date less any amount paid for the
shares. Dividends paid on the common stock and received by the participant
during the restricted period would also be taxable compensation income to the
participant. In any event, the Company will be entitled to a tax deduction to
the extent, and at the time, that the participant realizes compensation income.
A participant may elect, under Section 83(b) of the Code, to be taxed on the
value of the stock at the time of award. If this election is made, the fair
market value of the stock at the time of the election is taxable to the
participant as compensation income, and the Company is entitled to a
corresponding deduction. Dividends on the stock are then taxable to the
participant and are no longer deductible by the Company.
Participants may be required to pay in cash to the Company any taxes
required to be withheld at the date restrictions lapse with respect to
restricted stock. The participant may elect to satisfy withholding, in whole or
in part, by having the Company withhold shares of common stock having an
aggregate fair market value equal to the amount required to be withheld. The
Company would pay the tax liability from its own funds.
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Registration with SEC
Upon approval of the amendment to the 1992 Plan by the shareholders,
the Company intends to file a registration statement covering the offering of
the additional 500,000 shares of Common Stock under the 1992 Plan with the
Securities and Exchange Commission pursuant to the Securities Act of 1933, as
amended.
Vote Required
Shareholder approval of the amendment to the 1992 Plan requires the
affirmative vote of the holders of a majority of the shares of Common Stock
represented at the meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT TO THE 1992 STOCK PLAN.
4. PROPOSAL TO AMEND THE 1990 EMPLOYEE STOCK PURCHASE PLAN
General Information
On February 15, 1990 the Board of Directors adopted the Communications
Systems, Inc. 1990 Employee Stock Purchase Plan (the "Purchase Plan") and such
action was approved by the shareholders of the Company on May 15, 1990. The
purpose of the Purchase Plan is to encourage stock ownership by all employees of
the Company, provide an incentive to employees to remain in employment, improve
operations, increase profits, and contribute more significantly to the Company's
success. The Purchase Plan authorizes the purchase of shares of the Company's
common stock pursuant to a systematic payroll deduction program more fully
described below.
Proposed Purchase Plan Amendment
The Purchase Plan originally authorized the issuance of 100,000 shares
of the Company's common stock (as adjusted for a stock split in 1993). On March
2, 1995, the Board of Directors amended the Purchase Plan, subject to
ratification and approval by the shareholders, to increase the total number of
shares available under the Purchase Plan by 100,000 shares to a total of 200,000
shares. A total of 83,629 shares have heretofore been issued pursuant to options
granted under the Purchase Plan and at March 15, 1995, options to purchase
25,300 shares were outstanding, which options are exercisable at August 31,
1995. Therefore, without shareholder approval of this amendment to the Purchase
Plan, the Company will have an inadequate number of shares for awards under the
Purchase Plan. The Board of Directors has deemed it prudent to increase the
shares available for issuance under the Purchase Plan by 100,000 shares to
facilitate future purchases pursuant to the Purchase Plan.
Summary of Purchase Plan
The Purchase Plan is administered by a Committee consisting of not less
than three members who are appointed by the Board of Directors. Each member of
such Committee shall be either a director, officer or an employee of the
Company.
The Purchase Plan commenced on September 1, 1990 and has been carried
out in successive phases of one year each, with each phase commencing on the
first day of September. Eligible employees do not pay any consideration to the
Company in order to receive the options.
Any employee, including an officer of the Company (other than Curtis A.
Sampson who, as a 5% or more shareholder, is prohibited by law from
participating) who as of the first day of the month immediately preceding the
Commencement Date of a phase of the Purchase Plan, is customarily employed by
the Company for more than 15 hours per week, is eligible to participate in the
Purchase Plan.
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Eligible employees elect to participate in the Purchase Plan by
completing payroll deduction authorization forms prior to the Commencement Date
of any phase of the Purchase Plan. Payroll deductions are limited to 10% of a
Participant's base pay for the term of the phase of the Purchase Plan.
As of the Commencement Date of any phase of the Purchase Plan, an
eligible employee who elects to participate in the Purchase Plan is granted an
option for as many full shares as he or she will be able to purchase pursuant to
the payroll deduction procedure. The option price for employees who participate
on the Commencement Date of any phase of the Purchase Plan is the lower of: (i)
85% of the fair market value of the share on the Commencement Date of that phase
of the Purchase Plan, or (ii) 85% of the fair market value of the shares on the
Termination Date of that phase of the Purchase Plan.
Exercise of the option occurs automatically on the Termination Date of
the phase of the Purchase Plan, unless a Participant gives written notice prior
to such date as to an election not to exercise. A Participant may, at any time
during the term of the Purchase Plan, give notice that he or she does not wish
to continue to participate, and all amounts withheld will be refunded with
interest.
The Company believes that the Purchase Plan is a "qualified" Purchase
Plan under Section 423, Internal Revenue Code. Under the Internal Revenue Code,
as amended to date, no income will result to a grantee of an option upon the
granting or exercise of an option, and no deduction will be allowed to the
Company. The gain, if any, resulting from a disposition of the shares received
by a Participant, will be reported according to the provisions of Section 423,
Internal Revenue Code of 1954, as amended, and will be taxed in part as ordinary
income and in part as capital gain.
The Board of Directors may at any time amend the Purchase Plan, except
that no amendment may make changes in option already granted which would
adversely affect the rights of any Participant.
Registration With the SEC
The Company expects to file with the Securities and Exchange
Commission, pursuant to the Securities Act of 1933, as amended, a registration
statement covering the offering of the additional 100,000 shares of common stock
under the Purchase Plan, upon approval of the amendment of the Purchase Plan by
the shareholders.
Vote Required
Shareholder approval of the amendment to the Purchase Plan requires the
affirmative vote of the holders of a majority of the shares of common stock
represented at the meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE
AMENDMENT TO THE PURCHASE PLAN.
CERTAIN TRANSACTIONS
Transactions and Shared Management with Hector Communications Corporation
On July 23, 1990, the Company transferred the stock of the independent
telephone companies it owned to Hector Communications Corporation ("HCC") and
thereafter distributed the HCC common stock to its shareholders pro rata at the
rate of one share of HCC common stock for each two shares of the Company's
common stock. Thereafter the Company has had no continuing financial interest in
HCC, except for such matters as arise under the Distribution Agreement described
below, and except that certain executive officers and other employees of the
Company are also employed by and perform similar functions for HCC.
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In August, 1990 HCC and the Company entered into a Distribution
Agreement pursuant to which the Company has continued to make available to HCC
certain centralized staff services and systems, such as payroll and pension plan
administration, with the related costs and expenses being paid by HCC. In 1994
and 1993 HCC paid the Company $267,000 and $237,000, respectively, for such
services, amounts which management believes are no less than the cost the
Company incurred in connection with providing such services.
Two of the Company's executive officers, Curtis A. Sampson and Paul N.
Hanson, each devote approximately 60% of their working time to the Company.
Messrs. Sampson and Hanson devote the remainder of their working time to HCC, of
which Mr. Sampson serves as Chairman and Chief Executive Officer and Mr. Hanson
serves as a director and Treasurer. These officers are separately compensated
for their services to HCC.
Reports to the Securities and Exchange Commission
The Company's officers, directors and beneficial holders of 10% or more
of the Company's securities are required to file reports of their beneficial
ownership with the Securities and Exchange Commission on SEC Forms 3, 4 and 5.
According to the Company's records, except as noted below during the period from
January 1, 1994 to December 31, 1994, officers, directors and ten percent
beneficial holders of the Company filed all reports with the Securities and
Exchange Commission required under Section 16(a) related to their beneficial
ownership. To the best of the Company's knowledge, all such reports have been
filed in a timely manner.
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THE COMPANY'S AUDITORS
Deloitte & Touche have been the auditors for the Company since 1982 and
have been selected by the Board of Directors, upon recommendation of the Audit
Committee, to serve as such for the current fiscal year. A representative of
Deloitte & Touche is expected to be present at the Annual Meeting of
Shareholders and will have an opportunity to make a statement and will be
available to respond to appropriate questions.
SHAREHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
The proxy rules of the Securities and Exchange Commission permit
shareholders of a company, after timely notice to the Company, to present
proposals for shareholder action in the Company's proxy statement where such
proposals are consistent with applicable law, pertain to matters appropriate for
shareholder action and are not properly omitted by Company action in accordance
with the Commission's proxy rules. The next annual meeting of the shareholders
of Communications Systems, Inc. is expected to be held on or about May 15, 1996
and proxy materials in connection with that meeting are expected to be mailed on
or about March 31, 1995. Shareholder proposals prepared in accordance with the
Commission's proxy rules to be included in the Company's Proxy Statement must be
received at the Company's corporate office, 213 South Main Street, Hector,
Minnesota 55342, Attention: President, by December 15, 1995, in order to be
considered for inclusion in the Board of Directors' Proxy Statement and proxy
card for the 1996 Annual Meeting of Shareholders. Any such proposals must be in
writing and signed by the shareholder.
The Bylaws of the Company establish an advance notice procedure with
regard to (i) certain business to be brought before an annual meeting of
shareholders of the Company and (ii) the nomination by shareholders of
candidates for election as directors.
Properly Brought Business. The Bylaws provide that at the annual
meeting only such business may be conducted as is of a nature that is
appropriate for consideration at an annual meeting and has been either specified
in the notice of the meeting, otherwise properly brought before the meeting by
or at the direction of the Board of Directors, or otherwise properly brought
before the meeting by a shareholder who has given timely written notice to the
Secretary of the Company of such shareholder's intention to bring such business
before the meeting. To be timely, the notice must be given by such shareholder
to the Secretary of the Company not less than 45 days nor more than 75 days
prior to a meeting date corresponding to the previous year's annual meeting.
Notice relating to the conduct of such business at an annual meeting must
contain certain information as described in Section 2.9 of the Company's Bylaws,
which are available for inspection by shareholders at the Company's principal
executive offices pursuant to Section 302A.461, subd. 4 of the Minnesota
Statutes. Nothing in the Bylaws precludes discussion by any shareholder of any
business properly brought before the annual meeting in accordance with the
Company's Bylaws.
Shareholder Nominations. The Bylaws provide that a notice of proposed
shareholder nominations for the election of directors must be timely given in
writing to the Secretary of the Company prior to the meeting at which directors
are to be elected. To be timely, the notice must be given by such shareholder to
the Secretary of the Company not less than 45 days nor more than 75 days prior
to a meeting date corresponding to the previous year's annual meeting. The
notice to the Company from a shareholder who intends to nominate a person at the
meeting for election as a director must contain certain information as described
in Section 3.7 of the Company's Bylaws, which are available for inspection by
shareholders as described above. If the presiding officer of a meeting of
shareholders determines that a person was not nominated in accordance with the
foregoing procedure, such person will not be eligible for election as a
director.
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OTHER MATTERS
Management knows of no other matters that will be presented at the
meeting. If any other matters arise at the meeting, it is intended that the
shares represented by the proxies in the accompanying form will be voted in
accordance with the judgment of the persons named in the proxy.
The Company is transmitting with this Proxy Statement its Annual Report
for the year ended December 31, 1994. Shareholders may receive, without charge,
a copy of the Company's 1994 Form 10-K Report as filed with the Securities and
Exchange Commission by writing to Assistant Secretary, Communications Systems,
Inc., 213 South Main Street, Hector, Minnesota 55342.
By Order of the Board of Directors,
Richard A. Primuth,
Secretary
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COMMUNICATIONS SYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF SHAREHOLDERS TO BE HELD ON MAY 15, 1995
The undersigned hereby appoints C. A. Anderson, Paul J. Anderson and
Wayne E. Sampson, or any of them, as proxies, with full power of substitution to
vote all the shares of common stock which the undersigned would be entitled to
vote if personally present at the Annual Meeting of Shareholders of
Communications Systems, Inc., to be held Monday, May 15, 1995, at 3:00 p.m.
Central Daylight Time at The Marquette Hotel, 7th and Marquette, Minneapolis,
Minnesota 55402, or at any adjournments thereof, hereby revoking all former
proxies. The undersigned said proxies to vote as follows:
1. Election of Directors for terms expiring at 1998 Annual Shareholders Meeting
|_| WITH AUTHORITY to vote for all nominees |_| WITHOUT AUTHORITY to vote
listed below (except as indicated to for nominees listed below
the contrary)
(INSTRUCTIONS: To withhold authority to vote for any individual nominee,
write the nominee's name in the space provided below.)
Joseph W. Parris Curtis A. Sampson
-----------------------------------
2. Proposal to amend the Company's Articles of Incorporation to increase the
total number of authorized shares of common stock from 15,000,000 to
30,000,000 shares.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Proposal to amend the Company's 1992 Stock Plan to increase the total number
of shares of common stock available for issuance under such plan to 900,000
shares
|_| FOR |_| AGAINST |_| ABSTAIN
(Continued and to be signed on reverse side)
<PAGE>
(Continued from previous side)
4. Proposal to amend the Company's Employee Stock Purchase Plan to increase the
total number of shares of common stock available for issuance to 200,000
shares
|_| FOR |_| AGAINST |_| ABSTAIN
5. In their discretion upon any matters coming before the meeting.
THE SHARES REPRESENTED BY
THIS PROXY WILL BE VOTED
"FOR" THE ELECTION OF THE
DIRECTORS AND THE PROPOSALS
SUMMARIZED ON THE REVERSE
SIDE OF THIS CARD UNLESS
OTHERWISE SPECIFIED.
Number of Shares:______________________
Dated , 1995
Signature
Signature if held jointly
Please date and sign
exactly as your name(s)
appears below indicating,
where proper, official
position or representative
capacity in which you are
signing. When signing as
executor, administrator,
trustee or guardian, give
full title as such; when
shares have been issued in
names of two or more
persons, all should sign.
